Which of the following types of interest cost incurred in connection with the purchase or manufacture of inventory should be capitalized as a product cost?
A) Purchase discounts lost
B) Interest incurred during the production of discrete projects such as ships or real estate projects
C) Interest incurred on notes payable to vendors for routine purchases made on a repetitive basis
D) All of these should be capitalized.

Question

Quizplus · Accepted Answer

Interest incurred during the production of discrete projects such as ships or real estate projects should be capitalized as a product cost because it is directly related to the production process of a specific inventory item. Choices A and C are not directly related to inventory production and should be expensed as period costs. Choice D is incorrect as choice A and C should not be capitalized.

Which of the Following Types of Interest Cost Incurred in Connection